Fazl Ali, J.:— This is an application under Section 66(3) of the Income-tax Act, by one Bishwanath Singh Sharma, and the question which arises upon this application has been formulated in these words:

Whether under the circumstances of the case there was any evidence before the income-tax department to show that the market value of the properties in question was higher than the price bid for them by the petitioner at the public sale.

2. The properties referred to in this question are three sets of properties which were purchased by the petitioner assessee during the year of assessment in execution of his mortgage decree against three of his debtors named Gopal Singh, Palto Rai and Nemo Rai. The assessee though a money-lender did not mention these purchases in his return, but the income-tax officer came to know about them, and he at once proceeded to inquire what effect they would have upon his assessment.

3. During the inquiry the assessee claimed that as a result of these purchases he had sustained losses of Rs. 9212, Rs. 3922 and Rs. 6794 respectively, these sums representing, according to him, the difference between the decretal amounts and the amount fetched by the properties at the sale. The income-tax officer however dismissed the claim of the assessee in these words:

The claim for loss is obviously frivolous, since the amounts for which these properties are shown to have been purchased are much in excess of the principal involved in each case; and that no portion of these amounts were even taxed in the past.

4. The income-tax officer then addressed himself to the question as to what was the amount of interest realized by the assessee by means of the purchases, and after referring to certain matters he came to the conclusion that the assessee must be taken to have realized the full amount of the decree by purchasing these properties, and therefore the total amount of interest which he realized by means of purchasing these properties was Rs. 28,297 and the assessee was liable to pay tax upon this sum along with other sums. The assessee then appealed to the Assistant Commissioner of Income-tax, and one of the questions which was raised before him was whether in computation of assessable profit the value of the properties purchased should be taken to be the value at which the properties were purchased by the assessee at the auction sale or whether it was permissible for the income-tax department to make an inquiry as to the real value of the properties acquired. The Assistant Commissioner of Income-tax, after referring to the decision of the Privy Council in 12 Pat. 305,1 came to the conclusion that it was open to him to inquire into the real value of the property. He, then, taking the case of the three debtors individually, upheld the order of the income-tax officer with certain modifications. The assessee then, went up to the Commissioner, who made certain further modifications but the assessee not being satisfied with them, has come up to this Court under Section 66(3) of the Income-tax. Act. Now, for the purpose of answering the question which arises in this case, it will be necessary to take up the case of each of the three debtors separately. I will first take up the case of Nemo Rai. It appears from the petition filed by the assessee in this Court that the total amount of decretal dues for which the property of this debtor was advertised for sale was Rs. 11,222. The property which was advertised for sale was valued by the Court at Rs. 4035, and it was purchased by the assessee at Rs. 7300. The Income-tax Commissioner has held that the property was worth at least Rs. 10,000, and in doing so he has relied upon an admission made by the assessee himself that the lands which were purchased by him were worth Rs. 225 to Rs. 300 a bigha. The Assistant Commissioner of Income-tax also relying upon this admission, has stated in his order that the value of the land can be safely estimated to be Rs. 250 per bigha. As the land belonging to Nemo Rai was a bighas 15 kathas, the Assistant Commissioner valued it at Rs. 10,000. In my opinion the admission made by the assessee was a relevant piece of evidence which the Assistant Commissioner of Income-tax was justified in taking into, consideration in valuing the land and so far as the property of this debtor is concerned the question before us must be answered in favour of the income-tax department.

5. Another debtor whose property has been purchased by the assessee is Gopal Singh. The property purchased by the assessee in this case is a 6 annas share of his zamindari and about 9 bighas 5 kathas 5 dhurs kasht lands. It appears from the assessee's petition that the decretal amount for which these properties were advertised for sale was Rs. 13,012. The properties were valued at Rs. 1900 and the assessee himself purchased them for Rs. 3800. Now, the Assistant Commissioner of Income-tax was of the opinion that in spite of the fact that these properties were valued at Rs. 1900 and were purchased by the assessee at Rs. 3800 only, the entire decretal amount for which the property was sold must be deemed to have been realised and the property should be valued at Rs. 13,012. The learned Assistant Commissioner has stated in his order that although two or three opportunities were allowed to the assessee to produce road-cess valuation, khewat, khatian or any other evidence to prove the income of the zamindari as well as valuation of the land, the assessee failed to do so.

6. There was no other material before either the Income-tax Officer or the Assistant Commissioner of Income-tax and merely because the assessee failed to produce the papers in question it was assumed that the property must have been worth Rs. 13,012. Now, as was pointed out in 12 Pat. 305 the price which the assessee bids for the property at the public sale must ordinarily be taken to be its market value, but it is open to the income-tax department, if there is evidence before it, to hold that the property is worth more or less than the price which the assessee bid for it. In order, however, to hold that the property is worth more than the price fetched at the public sale, the department must have in its possession some tangible evidence. In this case there was no onus on the assessee, and the mere fact that he failed to produce certain papers did not justify the department in putting a higher value upon the property than the price fetched at the sale. The point which seems to have weighed greatly with the income-tax authorities was that the assessee did not bring his suit within six years of the execution of the mortgage bond, and the fact that he had waited for more than six years suggested that the property which was the subject of the mortgage was worth the full decretal amount. This is, however, mere speculation. There may be many reasons why the assessee did not bring the mortgage suit earlier. At any rate, no inference should have been drawn from this fact unless the assessee was given an opportunity to explain why the suit was not brought earlier. In my opinion, there is no evidence whatsoever to support the conclusion arrived at by the income-tax authorities in regard to the value of the properties of the debtor, Gopal Singh, and the question, therefore, must be answered in the negative so far as this debtor is concerned.

7. I will now proceed to consider the case of the third debtor, namely Paltoo Rai. The total decretal amount for which the properties were advertised for sale in the case of this debtor was Rs. 12,294. The properties which were advertised for sale were zamindari of 11 bighas. The Court valued the properties at Rs. 8500, and they were purchased by the assessee for Rs. 5500. It appears that in the course of the inquiry certain cess revaluation papers were produced by the assessee, and it was found that the properties in question had been valued twice, once long before the date of the auction-sale and again shortly after the auction-sale. According to the first valuation, the annual income of the property in question was Rs. 615 but according to the later valuation the annual income was Rs. 311. The Assistant Commissioner of Income-tax was of the opinion that the property must be worth twenty times the income shown according to the first valuation. Accordingly he valued the property at over Rs. 12,000. The Commissioner of Income-tax, however, was of the opinion that the income of the property, as shown in the second valuation, should not be altogether overlooked. He has pointed out in his order that if the valuation of these properties is estimated according to the second valuation, it would be over Rs. 6000; but as the cess revaluation took place after the purchase, the properties might be fairly valued at a figure below Rs. 12,000 and over Rs. 6000. The learned Commissioner of Income-tax then pointed out that the Court had valued the properties in question at Rs. 8500, and in his opinion that represented a fair value of the properties in question. It seems to me to be difficult to hold that there were no materials before the Commissioner of Income-tax to value these properties. The income of the properties, as shown in the cess valuation papers, afforded very good data for valuing the properties, and the learned Commissioner of Income-tax was also justified in taking into consideration the value of the property as estimated by the Court. In my opinion, therefore, so far as these properties are concerned, the question must be answered in the affirmative. In the circumstances of the case, I would allow the income-tax department to retain the sum of one hundred rupees which has been deposited by the assessee with them, but I would allow no further costs.

Harries, C.J:— I agree.

G.N/R.K

8. Order accordingly.